SLW-COMPLETES GLENCORE TRANSACTIONCOMPLETES GLENCORE TRANSACTION
Press Release - SILVER WHEATON CORP. Quotes:( SLW , SLW )
Friday, March 24, 2006 12:56:00 PM EST
Vancouver, British Columbia – Silver Wheaton Corp. is pleased to announce that it has completed the previously announced transaction with Glencore International AG. The Company has agreed to purchase 4.75 million ounces of silver produced per year, for a period of 20 years, from Glencore, based on production from their Yauliyacu mining operations in Perú. Silver Wheaton will provide an upfront payment of US$285 million, comprised of US$245 million in cash and a US$40 million promissory note, and US$3.90 per ounce of silver delivered under the contract (subject to an inflationary adjustment after three years).
Yauliyacu is a low-cost silver/lead/zinc mine located in central Perú which has been in continuous operation for more than 100 years and is expected to produce an average of 6 million ounces of silver per year during the term of the contract. In the event that silver produced at Yauliyacu in any year totals less than 4.75 million ounces, the amount sold to Silver Wheaton in subsequent years will be increased to make up for the shortfall, so long as production allows.
During the term of the contract, Silver Wheaton will have a right of first refusal on any future sales of silver streams from the Yauliyacu mine and a right of first offer on future sales of silver from any other mine currently owned by Glencore. In addition, Silver Wheaton will also have an option to extend the 20 year term of the silver purchase agreement in five year increments, on substantially the same terms as the existing agreement, subject to an adjustment related to silver price expectations at the time and other factors.
In order to fund the US$245 million cash consideration, Silver Wheaton has utilized cash on hand, together with US$125 million of bank debt.
Silver Wheaton is the only public mining company with 100% of its revenue from silver production. The Company expects to have annual silver sales of 15 million ounces in 2006, increasing to 20 million ounces by 2009 and thereafter. Silver Wheaton is unhedged and well positioned for further growth.